Entries Tagged as 'Equities'

As mentioned in my posts last week, my wife and I have decided to consider dividend paying companies as the underlying stock in future covered call trades. The idea is to not only capture the call premium, but also receive a dividend during the period in which we hold the underlying shares. It’s important to note that using a single company as the underlying adds concentration risk compared to using an ETF, but we hope to mitigate that somewhat by picking our companies from the list of 2009 Dividend Aristocrats.

I write a lot about our plans and strategies to reach “geographic independence”, but it is important to keep in mind that we’re also simultaneously pursuing a “traditional” retirement plan. That is, investing in our 401k and IRA options for asset and income growth. This past week my wife and I talked and we agreed to make some changes in those accounts.

Michael Lewis, the author of ‘Liar’s Poker’, has written an anecdotal analysis of the mortgage meltdown that both shocks and scares me. The picture he paints leaves me seriously wondering what Wall Street will look like when the current market turmoil resolves. It has also inspired some significant internal debate in me regarding what we should be doing to best position ourselves to reach our goal of geographic independence.

Did you know that GE is currently promising an annual dividend yield of 7.35% based on today’s closing price of $16.86? While that’s a pretty high dividend rate right from the start, things look even better if you start to think about GE’s long history of raising the dividend. Admittedly, this is based on assumptions, but it is conceivable you could be earning a 19.07% dividend yield in 10 years if GE maintains its recent 10% annual dividend growth.

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